Tuesday, June 5, 2012

“...[According
to the Center for Tax and Budget Accountability June 5, 2012], House-Joint
Resolution Constitutional Amendment (HJRCA) 49 is a key example of [a]
misguided approach to dealing with the state’s unfunded liability. This
legislation would add Section 5.1 to Article XIII of the Illinois Constitution,
which covers all public employee retirement systems (state and local) in
Illinois.

“HJRCA
49 would create a constitutional requirement that any pension benefit increases
would require three-fifths (3/5) approval by both houses of the General
Assembly. This would make it far more difficult for the legislature to enhance
retirement benefits for public workers in Illinois. HJRCA 49—itself a Constitutional
amendment also requiring a 3/5 vote— passed the House by the required majority
on April 18, 2012, and the Senate on May 3, 2012. That means HJRCA 49 will go
to the public in November 2012 as a separate ballot initiative.

“Advocates
justify their support for HJRCA 49 by claiming the proposed amendment
represents a positive step towards ensuring the fiscal health of Illinois’
public retirement systems. However, this rationale is misguided for two key
reasons. First and foremost, while the amendment may prevent future
legislatures from passing benefit enhancements without the accompanying and
necessary funding, HJRCA 49 does not reduce the state systems’ current $83
billion unfunded liability by even one cent.

“HJRCA
49 fails to address the real fiscal issue caused by the state’s outsized
pension debt—how to amortize the $83 billion debt owed to the five
state-sponsored retirement systems in a feasible way. Second, implementing a
Constitutional amendment that hinders the ability of legislators to institute
benefit increases would make it nearly impossible to rectify the problems
associated with the reduced benefit tier that lawmakers created in 2010—Section
IV details deficiencies of the second benefit tier…

“…Ensuring
the stability of Illinois’ public retirement systems is certainly a laudable
goal. That said, the means of ensuring stability should be designed to both
redress the true causes of the fiscal problem and constitute sound public
policy. HJRCA 49 fails on both counts. Since HJRCA 49 only deals with
restricting the ability to institute benefit increases, the legislation does
nothing to guarantee that public pension systems are adequately funded, thereby
entirely missing the core problem that created the state systems’ aggregate
unfunded liability. It would also interfere with the legislature’s ability to
remedy the flaws with Tier II, making it poor public policy. Adequate funding
of the state retirement systems is a pressing issue in Illinois.

“Rather
than passing symbolic Constitutional amendments that fail to address the actual
cause of the retirement systems’ underfunding, lawmakers should concentrate
their efforts on redesigning the currently back loaded and unattainable
repayment schedule for the debt owed to the five state-sponsored retirement
systems.”

For
the complete Issue Brief from the Center for Tax and Budget Accountability, please
read

To SIUC AA Members: If you need a better understanding of why the constitutional amendment that will be on the November ballot is of such great danger to us, here's a concise description of the problem(s).Bruce C. Applebyborrowed fromLinda Guinn and Lou Anderson @ Kankakee Community College

According to our lobbyist Dick Lockhart at the last meeting of the State SUAA Executive Committee, HJRCA49 is a Constitutional Amendment which could eventually replace the pension protection language ("shall not be diminished or impaired") in the current Illinois Constitution. The way it works in the court system is that when later language conflicts with earlier language in the Constitution, the later language takes precedence. Paragraph d is the deadly one.

d) Nothing in this Section shall prevent the passage or adoption of any law, ordinance, resolution, rule, policy, or practice that further restricts the ability to provide a "benefit increase", "emolument increase", or "beneficial determination" as those terms are used under this Section.

The highlighted words have the potential to allow future "restrictions" on or reductions in pension benefits that the existing Constitutional language would be taken to forbid. Consequently, the above language would replace the "shall not be diminished or impaired" section in actual practice. If this amendment passes in a constitutional referendum in the Fall, then future legislation could cut pensions dramatically; and we would not be able to win a lawsuit to stop the cuts based on the Illinois Constitution.Cuts could occur for everyone: Tier I and Tier 2 and Tier 3 (if Tier 3 is put into place) for both current employees and retirees. Self Managed Plan could also be affected for current employees.

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